Prime Minister Malcolm Turnbull has slammed the door shut on any increases to tax in the May budget.
After a week in which changes to capital gains tax and other tax measures to plug the widening national deficit were allowed on to the discussion table by the Coalition, Mr Turnbull on Friday ruled out a budget fix via the tax system.
"We have no plans to increase tax," he said during a joint press conference in Queenstown with New Zealand Prime Minister Bill English.
Rebuffing another intervention by his predecessor Tony Abbott, Mr Turnbull contrasted his tax record with Mr Abbott, noting that the 2016 budget delivered modest tax cuts to middle income earners to address bracket creep whereas the infamous Abbott-Hockey 2014 budget put a levy on high income earners.
"In 2014 personal income tax was increased, you may remember, with the deficit levy putting 2 per cent on the top personal rate. In the budget last year in 2016, personal income tax was reduced," he said.
The Prime Minister sought to capitalise on the conservative government of New Zealand's 2010 decision to cut the company tax rate, which is applied at 28 per cent compared to 30 per cent in Australia.
New Zealand also raised its GST to 15 per cent, something Mr Turnbull considered but backed away from when he took the leadership from Mr Abbott.
But Mr English only mounted a partial case for Australia following New Zealand in lowering the corporate rate, revealing that it had not delivered all the anticipated benefits.
"We think it is really important to signal that we want reinvestment in businesses, because that is what grows the jobs and grows the capacity, so we have got a pretty settled rate, it is lower than Australia," Mr English said.
"We had hoped it would attract a large number of Australian businesses across the Tasman. But that hasn't quite happened yet. We might have to lower it again."
Mr Turnbull shrugged off questions about Mr Abbott's intervention into the tax debate, saying he was not aware of the former prime minister's comments.
"What's the point of a Coalition government if we fail to encourage risk-takers and innovators, but penalise them with heavier taxes?" Mr Abbott said.
Debate inside the Coalition has centred on a budget fix since Treasurer Scott Morrison appeared to walk away from his mantra of Australia having a "spending problem not a revenue problem" by warning of a tax increase to pay for $13 billion in savings measures stuck in the Senate.
On Thursday, Fairfax Media reported that the government was considering options to curb the 50 per cent capital gains tax concession which applies to investors who have held an asset for a minimum of 12 months.
Last year, Mr Morrison flagged changes to curb the "excesses" of negative gearing but in Parliament on Thursday, Mr Turnbull ruled out changes to either.
"The government has no intention or plan to change capital gains tax or negative gearing. That has been our position, is our position," he said.
That means a housing affordability policy, expected to be the cornerstone of the budget will not include any tax changes but is expected to contain specific measures to address rising energy and childcare costs.